Lock In Cottonseed – With Delivery Charge

Livestock producers warned that Rita will disrupt market. John Vogel

Published on: Sep 23, 2005

As Hurricane Rita headed into the Texas Gulf Coast, Cotton Incorporated issued a news notice that a severe wind could blow the cotton – at peak harvest maturity -- out of the boll, thereby destroying the crop.

On the heels of Katrina, Rita could further press the transportation infrastructure. Trucks that would normally be delivering cottonseed to key dairy regions are currently being used in disaster relief efforts headed by FEMA and the Department of Homeland Security. With truck rates poised to rise drastically, rail may become a more viable delivery option.

Then there’s the fuel cost. Already, $15 per ton fuel surcharges are being reported. Cotton Incorporated suggests that dairy producers lock in cottonseed needs at a delivered price, which includes fuel charges, as opposed to origin prices.